TowerJazz, which specialises in analogue chips used in cars, medical sensors and power management, had forecast the first three months would be weak due to oversupply in some areas, such as mobiles where some clients had made large purchases of chips at the end of 2017.

It earned $31.1 million excluding one-time items in the first quarter, down from $49.9 million a year earlier. Revenue fell to $312.7 million from $330.1 million.

The company was forecast to earn an adjusted net income of $43.8 million on revenue of $325 million, according to Thomson Reuters I/B/E/S.

It was the first time in more than two years that TowerJazz missed its profit estimates, pushing its shares down 17.5 percent in pre-market trading in New York. Its Tel Aviv-listed shares were 16.8 percent lower in late afternoon trading.

Three months ago, TowerJazz had said it could reach $325 million in quarterly revenue “but some demand we thought would be taken wasn’t taken,” said CEO Russell Ellwanger.

“The market will snap back,” he told Reuters, saying the weakness in the mobile market was a temporary issue.

The company projects second-quarter revenue of $335 million — below analysts’ expectations of $344 million — and forecasts organic revenue growth of 25 percent for 2018. That excludes steady quarterly revenue of about $120 million from its joint ventures with Panasonic in Japan and Maxim in Texas.

Rather than building new plants, TowerJazz has tended to expand output by looking for partners with idle capacity or excess capacity in new plants that it can utilise.

TowerJazz has linked up with Tacoma Semiconductor Technology to establish a plant in China, offering technological expertise rather than cash in exchange for half the annual capacity.

TowerJazz is increasing output by 75 percent, or 6,000 more wafers per month, at its California plant for silicon germanium used in high-speed data transfer. Ellwanger said it would start having a revenue impact in the third quarter.

“We are growing our market share and the size of the market is increasing as there is more of a need for data centres,” said Ellwanger, adding that TowerJazz’s growth also stemmed from power management and its discrete chips used in automobiles.